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The economies of half-a-dozen states are set to be most severely affected because of the termination of the goods and services tax compensation programme in June last year, a Reserve Bank of India report on state finances said. The share of GST compensation had exceeded 10% of the tax revenue for these states on average, according to the report. The report said at least 10 states, including Karnataka, Tamil Nadu, Maharashtra, Gujarat and Uttarakhand, are expected to fall short of the expec
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FAQ :
According to the RBI report, Puducherry, Punjab, Delhi, Himachal Pradesh, Goa, and Uttarakhand are likely to be the most adversely affected by the end of the GST compensation regime.
These states are particularly vulnerable because the share of GST compensation in their total tax revenue exceeded 10% on average.
The five-year transition period for GST compensation ended on 30 June.
During the transition period, states received full compensation for the first five years, calculated as the difference between projected revenue growth (14% annually from a 2015-16 base year) and actual revenue.
Yes, several states, including Jharkhand, Chhattisgarh, and Delhi, have expressed concerns about revenue shortfalls and sought an extension of the GST compensation period.
The GST compensation cess collection is budgeted at Rs. 1.2 trillion, with Rs. 82,497 crore collected as of November. However, this collected amount will be used to repay loans taken by the Union government for states, rather than for further compensation.
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